you should discourse on this or the other thread what it is about Commerce One you like, besides the space it occupies. Why Commerce One, and not one of the others?
it is difficult for me to post on the other thread because i am not sold on the philosophy 100% for myself. i do think it is great for those with long time horizons and little time to research.
i picked cmrc initially on valuation within the group. up 60% in 3 days...that has changed.
this is a copy of most of an e-mail...i sent to my research group this morning...we have been in cmrc for a few days.
i have been reading everything i can find on B to B. Tom T tried to get me interested in arba when it IPO'd....we both watched in amazement at the huge run up from 20 to 180...but did not play.
there are four major players....really 5 including ORCL....orcl only had 15% rev growth last year...their earnings growth was much higher...but overall revenue growth is more important to me long term, so i am leaving them out for now.
company...mkt cap...P/S...revenueincreaselastreport...revs
VERT 4B 82 15x 27M
FMKT 2B 40 3x 11M
CMRC 9B 105 17x 35M
ARBA 31B 38* 7x 81M
CREE 5B 54 <2x 72
* i based the P/S for arba on the current earnings report....yahoo has 1,388 listed for P/S.
put cree in for comparison only...cree's earnings increase at 135% is phenomenal...and based on that, i consider cree underpriced even at current PE of 200...i think a PE of at least 2x earnings growth more appropriate for this kind of growth...based on last quarter's numbers, that is $202 per share... if cree can increase revenue growth a bit higher than 70% ...that PE will go up...
of course 70% a year works just fine for me.
if you want to see how that 70% charts, look at SUNW...i believe 70% is just about their average growth for past 5 years.
finance.yahoo.com
arba just reported earnings.
cmrc is due to report tuesday.
the reason the stocks are going ballistic is a combo of factors....short sqeeze and new players hopping on the growth....to understand that...lets look at arba...revenues up 700% last quarter...if that continues another 700% next year that is 7x7 or 49x increase. carry that out a few years and you see the reason for the excitement.
up to this point...we have seen retail companies reaching out to consumers via the net...much more....many times more of the total commerce transactions are done business to business.
now that business is moving to the net...the enabling software companies are going to make big bucks during this roll-out.
every business in the world is going to be tied to the internet within the next few years...one article i read said some 500 Billion will be spent over 3-5 years getting this done...these software companies are going to make a lotta money.
the reason for this transformation to e-commerce for B to B is simple...companies save money on transaction costs...studies show savings as much as 60%...this is huge and totally justifies the capital expense. to remain competitive, companies will have to do business on-line and quickly.
my plan....first! forget about selling cmrc before earnings....it just does not make sense...to sell a company with 17x growth....even if that is cut by say 60%, the growth will be 700%....in fact, if revenue growth is just ok, i will hold. the forecasts for overall B to B growth, eliminate cmrc as a trader from my mind...it may be a wild ride.....but rmbs, cree and gmst investors know how to ride em.
my concern is how to get a position in arba.....arba is the largest of the 4 and based on that metric, the most likely to become a gorilla....i also like the fact that after the earnings report...there is news that mexico and brazil businesses are aligning to do B to B with ariba software.....and ariba is moving into japan (cmrc already has a large presence in japan). if arba maintains the current growth rate, it doesn't matter where i buy....even if it dips, it will recover quickly....but i hate to buy em running, so i am going to buy a 20% position in arba today...i will look for a dip or real bad day to add. again with this growth, averaging down or up is not a problem for me.
VERT and FMKT are worthy of an investment too....
this B to B...may be about to experience AOL like growth.
as usual...i reserve the right to change my mind. LOL
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